CARBO Says 2Q16 “Likely” the Bottom for Proppant Market

CARBO logoContrary to the BH view that drilling will remain in the crapper for the rest of 2016 (see Baker Hughes Laid Off 3K in 2Q16, No Drilling Recovery in 2016), CARBO Ceramics, a company that supplies sand and ceramic beads used in fracking, was more upbeat about the rest of the year in their second quarter 2016 update. CARBO’s CEO Gary Kolstad said, “…the second quarter likely marked the bottom for activity levels as both oil and natural gas commodity prices and the North American rig count started to recover,” and “Sales volumes began to improve as the quarter progressed. In addition, with the increasing commodity prices, we have received increasing customer inquiries about procuring ceramic proppant for completions in the second half of 2016.” In other words, things are beginning to look up–at least according to CARBO. Their own numbers don’t seem to reflect that optimism. Total proppant sales (as measured in millions of pounds sold) were down an astonishing 75% year over year: 448 million pounds sold in 2Q15 vs. 112 million pounds sold in 2Q16. Here’s the CARBO upbeat 2Q16 update…
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CARBO Ceramics 1Q16: $25M Loss, Drillers Not Completing Wells

CARBO logoIn addition to watching companies that operate drilling rigs, like Patterson-UTI Energy (see today’s companion story) for indications of how well (or not) the drilling industry is doing, another type of company to watch is a proppant company–the companies that supply sand and ceramic beads used in fracking. CARBO Ceramics is one of the premier such companies. Yesterday CARBO issued their first quarter 2016 update. Like Patterson, the news wasn’t so good. CARBO lost $25 million in 1Q16. In some cases E&Ps (exploration and production companies, or “drillers” here on MDN) are electing to complete previously drilled wells–and that’s good for CARBO. But in many cases drillers are electing to leave already-drilled wells uncompleted, i.e. not fracked, and that’s bad for CARBO. Here’s more of the good, the bad and ugly for CARBO Ceramics in 1Q16…
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